Recently, a court ruling on the corruption of Meng Xijuan, the director of a provincial-level demonstration kindergarten in China, has shocked the education sector. She was accused of secretly opening accounts for the Qin Du diversion kindergarten without reporting or obtaining consent from the early childhood education group. She diverted custody fees, meal fees, art class fees, and other expenses that should have been managed in the kindergarten’s account within the early childhood education group to the bank account of the Qin Du diversion kindergarten and other personal bank accounts. This amounted to over 10.79 million yuan of public funds, constituting embezzlement. The defendant has consistently claimed, “The kindergarten is my personal contract business, how could it be considered embezzlement of state-owned assets?”
In the first-instance ruling of the Chunhua County Court in Xianyang City, Shaanxi Province, Meng Xijuan, the former director of the Qin Du diversion kindergarten, was sentenced to 11 years in prison for corruption and ordered to repay the involved funds of 10.795 million yuan. She was also fined 1 million yuan.
According to a report by The Paper, on June 8th, it was learned from Meng Xijuan’s family that the first-instance court ruled that Meng Xijuan was a state employee delegated to the company-operated kindergarten by the diversion electronic system.
However, Meng Xijuan’s relatives still insist that the diversion kindergarten was indeed operated under Meng Xijuan’s lease and contract. The 10.79 million public funds were actual kindergarten capital reserves, not state-owned assets, arguing that Meng Xijuan did not commit embezzlement. Currently, they have appealed to a higher court.
In 1993, Xianyang Diversion Electronic Technology Co., Ltd. (a state-owned affiliated enterprise) established a company-operated kindergarten. In 2005, Meng Xijuan took over management and transformed the kindergarten into a provincial-level demonstration site. In the wave of state-owned enterprise reforms in 2017, the kindergarten was transferred to the Xianyang Early Childhood Education Group Co., Ltd. as a non-operational asset.
According to an unapproved “Kindergarten Lease Contract,” the prosecution argued that although Meng Xijuan signed two contracts with the diversion electronic logistics department, the agreements were vague, insincere in expression, and with confusing serial numbers. One contract even lacked a specified contract period. There was no actual leasing relationship between Meng Xijuan personally and the diversion group or its logistics department. It was claimed that Bai Xiaofeng signed the agreement with Meng Xijuan to facilitate the application for a school permit.
The prosecution accused Meng Xijuan of embezzling state-owned assets through her status as a state employee, while the defense presented a key piece of evidence: the 2005 contract signed between Meng Xijuan and the diversion electronic company, asserting that the kindergarten was operated with independent capital investment by Meng Xijuan, and the funds belonged to the contract proceeds.
If Meng Xijuan is determined to be a “state employee,” her actions of diverting funds into private accounts and withholding custody fees would constitute embezzlement; if she is considered an “operating contractor,” it may only involve civil disputes.
According to an audit report, from January 2019 to July 2023, Meng Xijuan diverted a total of 10.795 million yuan through the “Qin Du Diversion Kindergarten” account and personal accounts, funds that should have been managed by the Early Childhood Education Group, including custody fees, meal fees, art class fees, etc. The prosecution believed that these funds should have been under the supervision of state-owned assets, and Meng Xijuan’s actions amounted to “illegally taking public funds for personal gain abusing her official position.”
However, the defense argued that the funds were actually used for the daily operation of the kindergarten, facility improvements, staff salaries, and even to repay Meng Xijuan’s personal advances. This “raising funds within the kindergarten” model is not uncommon in private kindergartens. Nevertheless, the first-instance judgment was clear that regardless of the ultimate use of the funds, they were initially categorized as state-owned assets, and their diversion without proper procedures constituted embezzlement.
It is noteworthy that as a provincial-level demonstration site, Meng Xijuan was once a “star kindergarten director” in the education system, solving the difficulties of staff childcare and building a benchmark kindergarten.
Currently, Meng Xijuan has filed an appeal, and the focus of the second trial is expected to be on three main areas: the authenticity and effectiveness of the contract, the legal definition of the state employee status, and the substantive examination of the nature of the funds. The outcome of this case may impact the judicial determination standards of similar restructuring disputes.
Education professionals point out that this case reflects deeper contradictions: under the policy background of encouraging social forces to run schools, how to define the boundaries between public and private operation? How to prevent the “restructuring dividends” from becoming tools for individual profit? These questions are much more complex than a simple judgment.
Currently, the Xianyang Early Childhood Education Group has initiated a special financial audit of all kindergartens in the city, and the future of the diversion kindergarten’s brand may change hands.